US Fiscal: Senate Pincer Squeeze

Published on October 8, 2013

This morning has been dominated by meetings by both parties on both sides of Capitol Hill, with each side plotting next moves and working to keep its ranks unified. On the House Republican side in particular, Speaker John Boehner and the House Republican leadership are again making their case to bring more of the Tea Party mutineers into supporting its pivot to fiscal policy issues and pulling the White House and the Senate Democrats into negotiations.

*** Indeed, with the House Republican leadership still hobbled by Tea Party defiance, the action this week is very much shifting to the Senate in what is shaping up to be a very powerful pincer move being orchestrated by Senate Majority Leader Harry Reid to maximize the political pressure on an increasingly embattled Boehner. ***

*** We would again repeat our central takeaway from yesterday’s update (SGH 10/7/2013, “US Fiscal: This Week’s Plan”) that  there is little to no chance there will be any breakthrough this week to end the stand-off over the shutdown and the looming threat of payment risks if the debt ceiling is not lifted. We still believe this will not be resolved, one way or another, until the days right up to or after the October 17 debt ceiling “first deadline” is breached. ***

There are perhaps dozens of rapidly evolving tactical moves and gambits scattered across the Capitol and being ricocheted across the media coverage, but here is our best sense of how the week is likely to shape up, and the contours of an eventual potential deal ahead.

Boehner Boxed In

Going into and after this morning’s meeting, Boehner still lacks the minimum 217 Republican votes he wants before the final version of legislation for a Continuing Resolution and an authorization to increase the debt ceiling can be pulled together, brought to a House floor vote, and passed with a unified Republican so-called “majority of the Majority.” The informal count puts his tally still at around 200 GOP supporters, and that is unlikely to change much today.

There is a resignation it will take the rest of this week before the House leadership can be reasonably assured they are close enough or just over 217 Republican votes to make a move. Most of the Tea Party holdouts either distrust the leadership too much to agree to any sort of fiscal policy amendments without an explicit defunding amendment, or still believe, with no small amount of delusion, that they are “winning” and Obamacare will be defunded.

The House GOP leadership is instead, for now, limited to pushing piecemeal bills to open various government agencies, none of which will see light of day. More importantly, the House GOP will continue to press its case to pull the White House and the Senate into negotiations, any negotiations, but which would provide the political cover of “progress” to put some forward momentum behind its pivot to fiscal policy issues and away from the politically costly pursuit of defunding Obamacare (see again, SGH 10/7/2013).

Reid’s Pincer

Senate Majority Leader Harry Reid, on the other hand, is pursuing a very aggressive two-part “pincer” strategy to isolate and ratchet up the public pressure on Speaker Boehner to allow a House vote on the “clean” Senate CR — which Boehner will steadfastly refuse — while proceeding with the preliminary procedural steps to set up a Senate floor vote on a (relatively) clean bill to increase the debt ceiling.

The testimony by Treasury Secretary Jack Lew on Thursday before the Senate Finance Committee will mark the start of the maximum political pressure of the pincer being brought to bear by the end of this week.

Reid needs at least six Republican Senators, or the appearance of six GOP votes, in favor of cloture to block a filibuster for the strategy to work. So far, it is reported he may have up to four Senate Republican moderates willing to consider the cloture vote if the bill is tweaked with some adjustments to its end date or with some budget overtures added in. But unless he has six locked down, as the saying goes, a miss is as near as a mile, and without it in this case, Reid is unlikely to risk letting the bill go to the floor.

That said, even if the Senate bill is passed, beyond laying the pressure on Boehner it means little in actual legislative terms since both a CR and a debt ceiling increase must originate in the House or be picked up and amended by the House, which for now the Speaker will refuse to do.

Interestingly, Reid’s hardline stance is also predicated on repressing any overtures for compromise from either the White House — thus the seeming willingness to accept a short-dated CR in the morning was withdrawn by the afternoon — or from within the Senate’s own Democratic ranks.

The risk, though, is that this could backfire if not carefully managed and work against Reid, especially if Boehner and the House Republicans hold under fire.

Boehner’s Bet

Indeed, our sense is that Boehner’s counter move is essentially a bet that despite the enormous political pressure being heaped on the House, Senate Majority Leader Reid will overplay his hand; and that would, in turn, enable Boehner to finally rally enough support from all but a hard core of no more than a dozen Tea Party dissidents to put him over the 217 vote hurdle he needs for maximum leverage.

By early next week, the thinking goes, the GOP will be able to use the shift in the political momentum to finally counter with their conjoined CR and debt limit legislation forcing a return to negotiations.

This morning, Boehner and the entire House Republican leadership went before the press pleading for President Obama and the Senate Democrats to plleeasee come to the table for negotiations. The effort, however, came off as weak and ineffective, and some within the leadership are now pressing hard for a more specific list of proposals to be laid out in the next day or two to better turn public opinion in their favor.

Along that exact line of thinking, the House GOP leadership is already rapidly moving forward with a bill to establish a “bicameral working group on deficit reduction and economic growth” to put some flesh on the GOP demands for negotiations to get underway.

Reid and the Senate will almost certainly ignore the move, but it is designed as much to allay the still deep distrust among the Tea Party ranks – by promising them a seat at the table –  as it is to ramp up the public pressure on the Senate to come to the negotiating table.

Outlines of a Deal

We would be remiss not to note that amid the hardening battleline positions taken by the leadership on the opposing sides of Capitol Hill, there were also multiple proposals and compromise ideas being bandied about across the Senate yesterday afternoon, the more interesting among them even carrying some bipartisan tones to them. One in particular caught our attention, which from what we understand, could point to the shape of an eventual deal.

The scenario we heard about would entail two key component parts: first, a Continuing Resolution to end the shutdown that would be for six weeks or 45 days, during which time both sides would also agree to name conferees to conference committee to reconcile the House and Senate Budget Resolutions stalled since last April.

Crucially — and this is the bit we find most interesting — the proposal also includes a one year extension of the debt ceiling that would revert back to the duration of the CR if the conference fails to cut a broader agreement on the budget. In effect, the threat of a reversion back to a short debt ceiling and the need for another debt ceiling vote would act as a “forcing mechanism” to lift the odds on that longer duration and farther reaching budget deal.

Another debt ceiling vote in front of the Thanksgiving and Christmas holiday period is something both Democrats and all but the most fanatical core of Tea Party Republicans want desperately to avoid. And neither would right now be willing to venture down that path.

But by early next week, with the stakes of failure even higher than ever, perhaps such a failsafe tact may not look so expensive. And hopefully, if it did come about, that forcing mechanism would work better than the similar mechanism written into the formation of 2011’s Super Committee, whose failure led to the sequester.

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